accounting NEW IN accounting

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1 accounting cases NEW IN accounting articles ONLINE COURSES books chapters PRODUCT UPDATE 2010 Academic institutions around the world use course materials available from Harvard Business Publishing to add dynamic, real-life perspectives to their undergraduate, MBA, and executive education courses. Here is a selection of new and noteworthy course materials in Accounting.

2 Harvard Business Publishing serves the finest learning institutions worldwide with a comprehensive catalog of case studies, journal articles, books, and elearning programs, including online courses and simulations. In addition to material from Harvard Business School and Harvard Business Review, we also offer course material from these renowned institutions and publications: Babson College Business Enterprise Trust Business Horizons Magazine California Management Review Darden School of Business Design Management Institute IESE Business School INSEAD International Institute for Management Development (IMD) Ivey School of Business Kellogg School of Management Rotman Magazine Sloan Management Review Social Enterprise Knowledge Network Stanford Graduate School of Business Thunderbird School of Global Management University of Hong Kong Customer service is available 8 am to 8 pm ET, Monday through Friday. Phone: ( outside the U.S. and Canada) Fax: [email protected] Web: hbsp.harvard.edu

3 New Cases Cases, a slice of business life, focus on actual problems and decisions facing a company. Students are challenged to put themselves in the protagonist s place and suggest business strategies, tactics, and solutions. AREVA Areva, the world s market leader in civilian nuclear power, is positioned to take advantage of renewed interest in this alternative energy source. However, several issues cloud the positive outlook such as the projected investment budget shortfall of 3 billion in How can Areva best generate cash to finance its investments for 2008 and beyond? Harvard Business School. # Choosing a GAAP for Canada In 2005, Canadian regulators adopt the International Financial Reporting Standards (IFRS). Canada already has a domestic accounting standard preferred by some Canadian companies, while others want to adopt the U.S. Generally Accepted Accounting Principles (GAAP). The case positions the student as a political advisor helping to choose among three possible outcomes. Harvard Business School. # Eddie Bauer (A) In June 2005, Eddie Bauer, the specialty apparel retailer, emerges from bankruptcy. Under the plan of reorganization, former creditors can convert their debt into common shares, taking 100% ownership in the reconstituted company. Large banks including Bank of America and JP Morgan Chase are among the creditors who must now decide whether to hold or sell their shares. Harvard Business School. # Forest City Tennis Club Pro Shop and Bar Lounge The new manager of a tennis pro shop and bar lounge prepares financial statements from notes kept throughout the first year of operations. The case is intended to be an introductory exercise in accounting for simple transactions relating to assets, liabilities, revenues, and expenses. Ivey School of Business. #909B08 Gucci Group: Freedom within the Framework The CEO of Gucci Group believes in a decentralized management style and since his arrival the company has experienced strong growth in revenues and profitability. In 2008, the group s largest business reports its first slowdown in over four years. The CEO considers becoming more directly involved in the decision-making process even though his management style conflicts with this action. Harvard Business School. # Heartland Payment Systems, Inc. An analyst evaluates shares in Heartland Payment Systems, Inc., a provider of bank card payment services, for inclusion in an equity fund. The company stock has been performing below expectations despite substantial growth in revenue and net income. Students must examine the company s strategy and consider the implications for financial performance. Thunderbird School of Global Management. #TB0025 HurryDate The founders of HurryDate, a small, privately held firm for speed dating, are considering options to fund future growth, including a full or partial sale of the firm. Students must assess the firm s strategy and the key risks and success factors associated with this industry, and make recommendations regarding the valuation of the firm. Harvard Business School. # hbsp.harvard.edu 1

4 Kansas City Zephyrs Baseball Club, Inc., 2006 Several accounting items are under dispute between the owners and players of the Kansas City Zephyrs baseball club. Students are asked to resolve these disagreements and determine the team s true profitability. The case illustrates the fundamental issues in accrual accounting. Harvard Business School. # Nippon Steel Corporation Nippon Steel has long been the top Japanese steel company. The emergence of a global player, Arcelor-Mittal, has prompted globalization of the steel industry and Nippon Steel feels the urgent need to globalize the company by not just increasing overseas production but also making necessary changes to the company structure. Harvard Business School. # Primo Benzina AG Primo Benzina AG is a retail chain of petrol stations in central Europe that has experienced rapid growth in revenue along with declining profitability. Will an increase in their credit limit allow them to implement their growth strategy? Students analyze the company s performance and cash-flow generation, then suggest changes to provide the company with a sustainable business model. Thunderbird School of Global Management. #TB0013 Risk Management at Wellfleet Bank: Abridged The Wellfleet Bank CEO must decide if the risk governance process is adequate to uncover mega-risks. Students assess and review the credit proposal s risks and decide whether Wellfleet should accept it. Students also learn that gray-area risk decisions and riskadjusted performance measurement can rarely be automated. Harvard Business School. # Supply Chain Partners: Virginia Mason and Owens & Minor (A) Virginia Mason Medical Center hires a main supplier for medical and surgical supplies. The two companies partner to design the Total Supply Chain Cost (TSCC) pricing program, an activity-based model that assigns cost drivers to the medical center while still allowing the supplier to make a profit. Following a yearlong test of the system, the two companies want to move to this new pricing model permanently. Harvard Business School. # Target Corporation: Ackman versus the Board Target Corporation, the second-largest discount store retailer in the U.S., has competed successfully against Wal-Mart in the past, but during the economic crisis, Target loses many loyal customers to the competition. A large shareholder becomes dissatisfied with the company s performance and initiates a proxy fight to replace five board members. The shareholder loses the fight but still raises questions about Target s ability to succeed in both good times and bad. Harvard Business School. # Transworld Auto Parts (A) Transworld Auto Parts is struggling to survive through the downturn in the automotive industry. The new CEO has been hired to turn the company around and she believes she needs to introduce significant changes to succeed. She asks members of her leadership team to create a Balanced Scorecard for their divisions to help align the company with her new strategy. Harvard Business School. # accounting product update

5 Twilight Acre Farms Limited The owner of Twilight Farms Limited, a mid-sized family-owned farm, has just finished the harvest and he must decide whether to purchase a new combine or repair the old one before the new season begins. This case requires students to perform a trade-off analysis on a future investment and Net Present Value (NPV) calculations. Ivey School of Business. #906B01 Understanding the Sarbanes-Oxley Act and Its Impact In 2002, U.S. lawmakers quickly passed the Sarbanes-Oxley Act (SOX) in the wake of several high-profile bankruptcies and the revelation of accounting irregularities and corporate fraud at several American corporations. Do the main benefits of SOX as well as the benefits for corporate governance justify the costs for the increased oversight? Ivey School of Business. #909B13 Wareham SC Systems, Inc. The CFO of Wareham Systems reviews the company s revenue recognition practices against the recently issued SAB 101 requirements. Wareham SC Systems is an equipment manufacturer and supplier to a variety of electronics-based industries, including makers of semiconductors. This is a series of six caselets that expose students to multiple situations using the same setting. Harvard Business School. # Winston & Holmes Winston & Holmes is a fine tobacco and men s accessories shop. The founder and president must decide whether to expand the company s Yorkville location. The company management feels the expansion is unnecessary following a breakout year in company performance. This case allows students to consider both the qualitative and quantitative sides of decision making. Ivey School of Business. #906B07 Popular Cases Bridgeton Industries: Automotive Component & Fabrication Plant Bridgeton Industries is experiencing reduced sales. To become more competitive, the company classifies its products into three groups and chooses to outsource the lowest category of products. However, the residual costs for the outsourced products do not go away and the remaining products now become candidates for outsourcing. The firm has entered a death spiral. Harvard Business School. # Chemalite, Inc. A chemical engineer sets up a company to manufacture and market one of his inventions and tries to prepare his state of the corporation report. This case is designed to introduce students to basic bookkeeping and accounting functions. Harvard Business School. # Citibank: Performance Evaluation Citibank has introduced a new, comprehensive performance-scorecard system. A regional president struggles with a tough decision: how to evaluate an outstanding branch manager who has scored poorly on an important customer satisfaction measure. This case provides a scoring sheet for the student to complete and an explanation of the ramifications of the decision for the business s strategy. Harvard Business School. # hbsp.harvard.edu 3

6 Depreciation at Delta Air Lines and Singapore Airlines (A) The accounting practices and principles used by Delta Airlines and Singapore Airlines differ in significant ways despite the many similarities between the two companies. Depreciation is an important expense for both airlines and the differences in the depreciation assumptions have dramatic consequences when they are compared. Harvard Business School. # Destin Brass Products Co. Destin Brass Products, a specialized brass manufacturer, is troubled by competitive pricing in pumps and higher than expected margins for flow controllers. Management suspects that cost accounting and cost allocations to products may be to blame. Students develop activity-based costs for comparison and then decide which system is most useful to company managers. Harvard Business School. # Kanthal (A) A multinational company needs an improved cost system to determine the profitability of individual customer orders. The goal is to direct sales resources to the most profitable customers: those who buy standard products in large predictable quantities with minimal demands on technical resources. Harvard Business School. # Microsoft s Financial Reporting Strategy Microsoft s overall financial reporting strategy is explored through an examination of the company s treatment of two accounting issues software capitalization and revenue recognition. The case provides a forum to discuss reasons for Microsoft s accounting and disclosure choices and also discuss the Securities and Exchange Commission s investigation into Microsoft s accounting practices. Harvard Business School. # Seligram, Inc.: Electronic Testing Operations This case demonstrates how cost systems can become obsolete as technology changes over time. Students are asked to increase the number of cost-center and allocation bases as the firm moves from a one-center, direct labor-hour system to a three-center, direct labor-hour and machine-hour system. Harvard Business School. # Super Project The manager of financial analysis at General Foods questions the suitability of the company s capital budgeting system in evaluating a proposal to introduce a major new product called Super, an instant dessert. Several costs may have been omitted from the analysis and need to be considered in assessing the value of this new product investment. Harvard Business School. # Vyaderm Pharmaceuticals In 1999, the new CEO of Vyaderm Pharmaceuticals introduces an Economic Value Added (EVA) program to focus the company on long-term shareholder value. The program implementation runs into several stumbling blocks including resistance from regional managers. The case focuses on the competitive situation where the sudden exit of a competitor produces an unexpected one-time windfall in earnings. Harvard Business School. # accounting product update

7 New Brief Cases Brief Cases from Harvard Business Publishing outline compelling business dilemmas that illustrate core learning objectives. Each case is 5 8 pages long plus exhibits and is supported with a Teaching Note. Biovail Corporation: Revenue Recognition and FOB Sales Accounting Biovail Corporation, a major Canadian pharmaceutical company, announces that it will miss its quarterly earnings target by $25 to $45 million. The company blames $10 to $15 million of the shortfall on a truck accident that occurred on the last day of the quarter. Explores the concepts of revenue recognition, the ethics of earnings management, relationships with analysts, and the enforcement role of the SEC. #4011 Depreciation at Delta Air Lines: The Fresh Start After Delta adopts fair value accounting as part of its fresh start emergence from bankruptcy, the company changes its approach to depreciating its aircraft. Introduces students to depreciation policy and the links between accounting policies and financial reporting choices. #4013 Lyons Document Storage Corporation: Bond Math A manager must analyze the refunding of bonds issued in 2000 when interest rates were higher and consider the possible consequences. Students must calculate the present value of interest and principal payments. #3215 Merrimack Tractors and Mowers: LIFO or FIFO? A CFO proposes changing from LIFO to FIFO to maintain earnings growth, but the plan has income tax consequences. The case demonstrates that firms often have choices about accounting policies. #3217 The Talbots, Inc. and Its Subsidiaries: Accounting for Goodwill Focusing on the firm s acquisition of J. Jill, the case demonstrates what goodwill is, how it originates, how it is measured at acquisition, and how it is amortized or impaired. #3254 ÆÆ Find more cases, Brief Cases, and role plays at hbsp.harvard.edu New Article Articles from Harvard Business Review and other content partners provide up-to-theminute ideas from the best business thinkers. One World One Accounting Companies are required to produce financial statements based on country-specific financial reporting standards. Individuals looking to invest in them must deal with financial statements based on different financial languages. This article explores these differences and analyzes the concept of all businesses adopting the same set of rules. Business Horizons. #BH354 hbsp.harvard.edu 5

8 Popular Articles Balanced Scorecard: Measures That Drive Performance Creating a balanced scorecard requires translating a company s strategy and mission statement into specific goals and measures. It requires an examination from four different perspectives: customer satisfaction, internal processes, innovation, and shareholder value. Harvard Business Review. #4096 Control Tomorrow s Costs Through Today s Designs Target costing is a cost-management technique for establishing product costs at the start of development. The company determines how much customers are willing to pay for a product and then designs the product within cost limits for selling profitably at the predetermined price. Harvard Business Review. #96104 Measure Costs Right: Make the Right Decisions This article explains the power of activity-based costing to provide a more accurate view of product costs and profitability. Virtually all of a company s activities exist to support the production and delivery of goods and services. Companies need not scrap their official cost systems to use activity-based methods. Harvard Business Review. #88503 One Cost System Isn t Enough No one cost system gives managers all the information they need to promote operational efficiency and produce the highest quality product at the lowest cost. Cost systems must serve three functions inventory valuation, operational control, and product cost measurement. Harvard Business Review. #88106 Putting the Balanced Scorecard to Work This article shows how companies are putting the balanced scorecard to work. Much more than a measurement exercise, the balanced scorecard is a management system that can motivate breakthrough improvements in critical areas as product, process, customer, and market development. Harvard Business Review. #93505 Take Command of Your Growth Managers can control their company s growth if they have better information about where their revenues come from. This article presents a tool the sources of revenue statement (SRS) that does just that. With this tool, revenue can be viewed as the outgrowth of manageable circumstances. Harvard Business Review. #R0404J Time-Driven Activity-Based Costing Time-Driven Activity-Based Costing is a new approach that deals with the problems of large-scale ABC implementation. Under the new system, managers take into account time that is idle or unused. Includes concrete examples of how managers can obtain meaningful cost and profitability information. Harvard Business Review. #R0411J Using the Balanced Scorecard as a Strategic Management System The balanced scorecard revolutionized conventional thinking about performance metrics. This article includes a one-page preview that quickly summarizes the key ideas and provides an overview of how the concepts work in practice along with suggestions for further reading. Harvard Business Review. # accounting product update

9 Why Good Accountants Do Bad Audits Is corruption the main cause of bad audits? Or is the problem an unconscious bias? Because of the often subjective nature of accounting and the close client relationships between companies and their auditors, even the most honest and meticulous of auditors can unintentionally massage numbers and mask a company s true financial status. Harvard Business Review. #R0211G ÆÆ Find more articles at hbsp.harvard.edu Online Courses NEW! Now Available in Sections Online courses introduce complex subjects and can be used in advanced undergraduate business courses, as pre-matriculation requirements for MBAs, or assigned as homework over the course of a semester or year. Online courses are available as complete courses or in sections. Finance Covers the core topics in Finance that a business student must master. Complete Course # Introductory Section #6000 Financial Accounting Introduces Financial Accounting in a management context. Complete Course # Introductory Section #6002 Advanced Section #6003 Mathematics for Management Reviews key mathematics concepts and skills used in the MBA curriculum and in business. Complete Course #3350 Algebra Section #6004 Calculus Section #6006 Statistics Section #6007 Probability Section #6008 Finance Section #6009 Quantitative Methods Covers basic topics in statistical analysis required for MBA-level coursework. Complete Course # Regression Section #6012 Spreadsheet Modeling Demonstrates how to use Excel functionality to solve business problems. Complete Course #3252 Introductory Section #6010 Advanced Section #6011 hbsp.harvard.edu 7

10 ÆÆ For more information about online courses, visit hbsp.harvard.edu Books Individual chapters may be integrated into course materials, while books may serve as primary class text. Cost and Effect: Using Integrated Cost Systems to Drive Profitability and Performance Robert Kaplan and Robin Cooper present the principles and practice of activity-based costing (those systems that measure where time and resources are actually spent), how they differ from traditional systems, and how they will evolve during the next few years into an integrated part of a company s financial system. Available in chapters. #7889 ISBN: Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal Based on a ten-year examination of control systems in over 50 U.S. businesses, this book by Robert L. Simons broadens the definition of control and establishes a critical bridge between the disciplines of strategy and accounting and control. Available in chapters. #5592 ISBN: Time-Driven Activity-Based Costing: A Simpler and More Powerful Path to Higher Profits Many executives who try to implement ABC on a large scale find the approach limiting and frustrating. In this book, Steven R. Anderson and Robert S. Kaplan demonstrate how to implement time-driven activity-based costing (TDABC), an easier and more powerful way to implement ABC. Available in chapters. #1711 ISBN ÆÆ Find more books and chapters at hbsp.harvard.edu 8 accounting product update

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12 Build a Course at hbsp.harvard.edu Save students up to 50% off standard pricing n Design a course with content from our collection. n Make the course available to students. n Students receive the academic discount and save up to 50% on course materials. Get started now. Go to hbsp.harvard.edu Harvard Business School Publishing. Harvard Business Publishing is an affiliate of Harvard Business School. Product #M12684 MC